📝 Price Analysis 📝
Bitcoin managed to break through the ATH in December of last year and ETH only managed to do it in late Jan. Bitcoin continued its parabolic rise such that it is currently sitting at over 280% above its previous ATH Ether, on the other hand, has had a more measured appreciation and is currently only 35% above its ATH. While nearly all Bitcoin and Ethereum wallets are in profit, you have relatively more unrealised profit in the Bitcoin wallets. What this therefore means is that Bitcoin hodlers are more likely to take profit at these levels than your Ethereum holders. We have also had a fall in Bitcoin dominance which means that people are pivoting to Alts. You can also observe that the correlation between Bitcoin & ETH is falling.
🧳 Investor Class 🧳
There appears to be a lot of institutional investors that are looking into ETH. Most analysts tend to look at is the amount of ETH that is held by the Grayscale investment trust. The total amount of ETH that has been locked in Grayscale has been on the rise over the past 6 months. When they recently reopened the fund in Feb they had a full 52,000 ETH that was purchased. Since the first of feb, the amount of ETH held in the Grayscale ETH fund has increased by almost 7% In the first two weeks of Feb, inflows into ETH products accounted for a full 80% of all crypto fund inflows. You then also have to look at the insane amount of interest that has come for CME futures. It’s usually the institutional investors that are using CME futures.
💎 BTC vs. ETH Demand 💎
Bitcoin is mostly viewed as a store of wealth to be hodled by investors. There are very few people who still use it as a method to pay for transactions. However, ETH has a lot more utility demand. As a developer blockchain, the Ethereum network has seen an explosion in demand. This has become particularly acute thanks to the exponential rise of Defi over the past year. All of this network use of course leads to demand for ETH. Not only is ETH often used as collateral in many of these protocols, but gas fees are also paid in ETH. As we know, Gas fees have been sky high recently.
📈 BTC vs. ETH Supply 📈
People invest in Bitcoin because of the 21 million Coin limit. They think that ETH is less worthy because there is no limit on the supply. However, you have to consider supply that is easy to sell on the market. Both Bitcoin and ETH have seen a fall on the exchange balances which means that there is less of it to sell on the open market. The difference between ETH and BTC off exchange balances is the fact that Bitcoin can easily be sold whereas ETH supply is more “Sticky”. This is held in smart contracts which means that it cannot easily be withdrawn. This is ETH that is either locked in DeFi smart contracts or the ETH that has been locked in the ETH 2.0 deposit contract. When it comes to the latter, there is over 3 million ETH that is locked. There is also over $40 billion that is locked in DeFi.
🖥 EIP 1559 🖥
This is an Ethereum Improvement Proposal that will see the fees become that much more manageable. It will involved a set BASEFEE that will be determined by the blocks and the miners will get tips in order to push through earlier transactions. The BASEFEE will be burned which means that the ETH will get burned as well. This will lead to a reduction in the amount of ETH in the market and it is possible that this could completely neuter the impacts of inflation on the network.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.